June 25, 2013

Four Ways the Energy Industry Could Derail Obama’s Environmental Regulations in Court

Obama will not announce his plans to regulate the emissions of existing power plants until his Tuesday afternoon speech at Georgetown University. But that hasn’t delayed industry groups from threateningto litigate whatever new rules the Environmental Protection Agency issues, albeit several years from now.

Everyone, from regulators and environmentalists to industry observers, expected as much. “There is no end to the legal creativity of the regulated industry,” said Lisa Heinzerling, a professor of environmental law at the Georgetown University Law Center. David Hawkins, director of climate programs at the Natural Resources Defense Council, agreed. “Virtually every rule that the EPA adopts under the Clean Air Act,” which the Obama administration will use to regulate power plants, “is litigated. So the fact that it’s litigated doesn’t say a thing about the strength of polluters’ legal arguments,” he said.

And yet, as Simon Lazarus and Doug Kendall have pointed out for Grist, any challenge to new regulations would wind up before the U.S. Court of Appeals for the D.C. Circuit, where conservative appointees hold a majority. And the threat of a court decision against them has already cowed the EPA into delaying its rules for new power plants earlier this year. Here are four legal arguments industry groups might deploy against regulations on existing power plants.

The EPA is using the wrong tools to regulate existing power plants.

The EPA, in writing its new rules, will be working off of a provision of the Clean Air Act that is broadly written and little-used. On the upside, this gives the Obama administration the chance to try out novel forms of regulation—the EPA could propose that a state which didn't want to meet new emission standards by retrofitting its power plants could tackle other sources of greenhouse gases instead. "It's discretion at its height," said Heinzerling.

But on the other hand, she added, "If you're working on a pretty clean canvas, people can say there's no sign about what's acceptable." And so, Hawkins said, "We expect the industry to argue that EPA only has authority to set standards based on hardware that could be applied to power plants—that it cannot rely on techniques like increasing clean electricity generation as a way of complying with the standard." Recently, Robert Wyman, an attorney for a group of power plant owners, made a related argument: That the EPA does not have the authority to differentiate between states. If a court agreed, that could preclude the option EPA is said to be exploring to develop different plans for each state to meet new emissions caps.

The EPA didn’t think through the costs of its new regulations.

The Clean Air Act requires the EPA to take cost and feasibility into account when writing new regulations like these, and make sure that the cost to the regulated industry is a reasonable one.

Of course, that leaves the door open for power plant owners to challenge the EPA's math. This line of argument has already persuaded the D.C. Circuit to kill the EPA's limits on sulfur dioxide and nitrogen oxide emitted by power plants, in 2011; the court found that that rule would be too costly for power plants to bear in the time the EPA was allowing. It's the same attack power groups have launched on an EPA rule regulating mercury emissions from coal plants. And the argument is so politically damaging that the threat of it is part of what caused the EPA to delay rules on new coal-fired power plants earlier this year—opting to consider rewriting them so they were not so stringent.

The EPA cannot regulate existing power plants any differently than it regulates new ones.

“This is a weird one,” said Heinzerling.

The Obama administration is currently in the process of writing rules to regulate new power plants. Under the Clean Air Act, that triggers an obligation for the EPA to also regulate existing plants. But the EPA missed its April deadline to finalize regulations on new power plants. It has gone back to the drawing board to determine whether to regulate coal-fired and natural gas plants differently, as the former produces about twice the emissions of the latter. Heinzerling has heard it argued that the EPA must regulate existing coal and gas plants differently if it decides to regulate new plants that way, and vice versa. Again, the broadness of the statute the EPA will rely on for existing plants makes that an open question.

Neither Heinzerling nor Hawkins could think of a legal challenge in the past that deployed an anti-regulatory argument like this one, making Hawkins skeptical that industry groups would use it. “There is a bit of jargon in the legal profession, the ‘red face test.’ It means if you can’t make an argument without your face turning red, the argument is probably too silly to make,” he said. “And this comes across as a very silly argument.” Then again, so did the argument that almost felled Obamacare.

There’s an “and” where there should be an “or.”

The rulemaking process is unwieldy enough, said Heinzerling, and environmental regulations are so behemoth, that someone is bound to challenge the final rule on a technicality. “Saying, ‘You didn’t provide this piece of evidence, you didn’t tie this aspect of the rule to the statutory language, you didn’t respond to this comment’—those are the bread and butter of administrative lawyers,” she said.

She pointed out that just this Monday, the Supreme Court agreed to review the Cross-State Air Pollution Rule the EPA issued in 2011. Challengers are saying that the rule, which regulates coal-fired power plants by capping the amount of emissions that cross state lines, did not prove that the coal-fired plants in question made a “significant contribution” to cross-state pollution, which is the baseline standard for regulation. “You can’t predict what they will be with any precision in advance," she said. "You just know they’re coming.

Molly Redden is a staff writer for The New Republic. Follow her on Twitter @mtredden.